The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

Immigration Reform Leaders Arrested 10 (Photo credit: Wikipedia)

Appearing this morning on ABC’s “This Week”, Pennsylvania GOP Congressman Lou Barletta, a staunch opponent of immigration reform, and Nobel Prize winning economist Paul Krugman went toe to toe on the projected costs to the nation of moving forward with an immigration reform program.

According to Barletta, citing a 2007 Heritage Foundation study, the tab for allowing immigrants a path to citizenship—even after considering an increase in tax collection from those who are brought into the system—will total some $2.6 trillion in Medicaid, Medicare, Social Security and other costs to the American taxpayer.

Mr. Krugman promptly and vehemently disagreed, labeling the costs to the federal government of creating a path to citizenship “pocket change”.

So, who is telling the truth?

Considering that nobody has yet to actually put forth a bill that would get the Congressional Budget Office moving on scoring any proposed legislation, we don’t really know. We can, however, get a sense of what might lie ahead based on the numbers presented by the CBO when scoring a similar pathway to citizenship proposal put forth by a bipartisan committee in the United States Senate in 2007— a proposal that was supported by the Bush White House but ultimately never made it to a full vote in the Senate.

The 2007 CBO report concluded that federal spending resulting from a pathway to citizenship would run about $23 billion over ten years with the costs coming primarily from government expenditures in Medicaid and refundable tax credits.

However, the report also determined that legalization would generate $48 billion in new revenue, primarily as a result of bringing in more contributions to Social Security, noting that the majority of newly legalized immigrants would be working age—meaning they would not be calling on Social Security and Medicare payouts for many years but would, instead, be making contributions to the program.

While these numbers reveal a net 'plus', when we add to the equation the estimated cost of implementing the 2007 proposal—$43 billion over ten years—the net cost of that immigration reform plan totaled a loss of about $18 billion over a ten-year period. And while the CBO anticipated that this $18 billion would be added to the deficit, when looked at over a 20 year period, the CBO characterized the costs as having “a relatively small net effect.”

If these numbers are even close to accurate, there is little question that the truth is much closer to Mr. Krugman’s suggestion that the cost is little more than a rounding error in the federal budget rather than the cataclysmic impact alleged by Congressman Barletta.

But that was 2007 and things have changed quite a bit since that time—changes that could dramatically affect the relative costs and benefits of bringing undocumented immigrants out from the shadows. Certainly, the most significant of these changes would have to be the arrival of the Affordable Care Act and the government subsidies that could flow to what is estimated to be seven million newly minted Americans who could benefit financially from the healthcare reform law.

While many anti-immigration voices are now pinning their dire predictions of runaway immigration costs on Obamacare, it remains unclear as to what the impact would actually be. While some argue that the costs of making Obamacare subsidies available to newly legalized immigrants will be huge, others make the case that including millions more young and healthy people to the insurance pools will serve to lower the costs of purchasing a health care policy for all Americans participating in the private health care insurance markets.

The issue has not gone unrecognized by the White House or the bipartisan Senate group as each has put forth a proposal that would deny the benefits of the ACA—along with virtually all other public benefits—to those who gain provisional legal status under the reform effort without having yet achieved full citizenship. While nobody has any idea how long of a period this could turn out to be, when considering that the proposals on the table require that those seeking citizenship first pay all back taxes, a cash penalty and then go to the back of the line behind those who have sought entry into the United States via the legal immigration process, it is reasonable to anticipate that many years would be involved.

And that doesn’t even contemplate the many years that will pass as the pathway to citizenship is held up until full border security has been reached, a condition that currently exists in the Senate proposal that is a prerequisite to any steps forward in the effort to grant most undocumented immigrants any legal status.

The bottom line here is that anyone telling you that immigration reform will be a fiscal disaster for the nation is really not telling you the truth.

While it remains to be seen if the legislation that will be finally be proposed can create a law that is revenue neutral—or proposed in a way where the net cost to the federal budget is easily eclipsed by the benefits to the economy—any legitimate contemplation of the benefits or detriments of immigration reform must, for now, be taken on without bias as to presumed cost. I say that because any costs to the federal budget may well turn out to be far less severe than you might anticipate when weighed against potential economic benefits.

What might those benefits be?

In 2010, The Center For American Progress’ Immigration Policy Center published a study concluding that a comprehensive immigration policy would actually improve GDP by 0.84 percent, representing some $1.5 trillion over 10 years.